PHOENIX -- The coal-fired Navajo Generating Station supplies a fraction of Arizona's electricity demands, but it plays a critical role in moving water to the state's largest cities.

Federal regulators have proposed rules that would require the plant to install expensive new emissions equipment, and the plant's owners say the cost could push power rates out of reach for users, including the Central Arizona Project Canal.

The plant supplies electricity cheaply enough for CAP to pump water to Phoenix and Tucson.

CAP officials say there's little question the new regulations proposed by the U.S. Environmental Protection Agency would result in higher prices for water users.

"What we do can't be done without water or power," said David Modeer, general manager of the Central Arizona Water Conservation District. "Power is the biggest expense related to the price of our water. I can't think of any bigger threat to us other than the Colorado going dry."

The proposed rules, if adopted by EPA, would force owners of the Navajo plant as well as the Four Corners Power Plant in northwestern New Mexico to install complex new air scrubbers that use ammonia to break down pollutants.

Environmentalists have targeted Navajo and Four Corners for years because of the emissions-related haze that builds up in the region. The EPA ranks Navajo as the nation's third-largest emitter of nitrogen oxides, and Four Corners is the second-largest.

Aside from the potential increase in water rates, some fear the cost of curbing emissions could be felt by tribal economies.

The coal burned to produce electricity is mined on the nearby Hopi and Navajo Indian reservations, and tribal members supply much of the labor needed to keep the plant running. If the plant closed, the tribes would lose jobs and millions of dollars in revenue from the coal.

The plant's owners, which include five utilities, were considering installing more efficient burners to reduce nitrogen oxides. The cost would be about $43 million, substantially less than the system proposed by the EPA, which could range between $600 million and $1 billion.

Salt River Project, the plant's managing partner, estimates the scrubber system would add about $13 million a year to the plant's operating budget, expenses that would be passed on to users.

The Los Angeles Department of Water and Power, which holds a 21 percent interest in Navajo, faces strict rules under California law about investing money in coal-fired plants and could decide to walk away from Navajo if the expenses rise too high.

The plant's partners have enlisted Gov. Jan Brewer and have appealed to Arizona's congressional delegation, but they still fear the EPA is on track to require the upgrades. The agency will accept public comments through the end of the year before making a final decision, which is expected by the middle of 2010.

The Navajo Generating Station was built to provide power for the canal, which snakes 336 miles from the Colorado River near Lake Havasu City to Phoenix and Tucson. The power feeds pumps that move almost 500 billion gallons of water a year.

It takes 2.8 million megawatt-hours of electricity to lift the water a total of almost 3,000 feet in elevation.

"We do not have an alternative," said Susan Bitter Smith, president of the board that oversees the canal. "This is a survival issue for us. We need the EPA to work with us in a rational, logical way that takes into consideration all of the consequences."